Member Info for NoloServileCapis

Hi Zac,

1) what I had in mind is the potential for the LGEN price to rise. Every which way I look at LGEN I think it represents real value. For starters, it has the next 6 years of profits already booked, the market cap is only marginally above NAV and the current yield is much higher than the 10 year mean. The sector is out of favour and when interest rates fall its yield will become more attractive. Add to that increasing US private investor interest in the FTSE value and it seems to me that there is strong potential for LGEN to surprise on the upside. However, I have no idea when and, as i intend to keep adding, i hope it isn’t too soon. It may take a long time and in the meantime I am very happy to bank the dividends. On the other hand I worry that global tech stocks are already quite toppy and I worry that the risk is on the downside.

2) don’t get me wrong, I am happy with the international index performance over 5 months and look forward to comparing over longer periods. I am just glad I bought more LGEN instead.

Overall I am happy to own all 3.

DYOR etc…

GLA

I meant interrupt not interest

On the perennial debate (largely driven on this bb by Zac) of the merits of holding funds over individual shares I thought I’d compare the performance of a couple of funds I bought at the beginning of august 23 with LGEN. I had bought some LGEN on the same day at 228.96.

Including the second dividend LGEN is up 12.3%.

L&G global tech index is up 21.11%

L&G international index is up 8.96%

But whilst the global tech performance is clearly better than LGEN itself I do wonder whether it has the potential to outperform to the extent that LGEN does.

If LGEN were to rise to £3 (which I regard as a fair price) that would be a further rise of 21.11%.

I am merely musing, of course, but I am happy to continue to be overweight in LGEN and wait for the price to rise to a sensible level.

Even the international index hasn’t one too badly but am glad I didn’t buy more.

Sorry to interest the political discussion btw.

GLA

The President of Argentina put it very well when he addresses the panjandrums of the world elite at Davos this year.

Well worth a listen.

https://twitter.com/aphysicist/status/1747868626948907325?s=46&t=8llKVLpDRNj4LdKfIcfTRw

Meconopsis, spot on! Can’t disagree with a single word.

Meconopsis,

That is an interesting and encouraging point re the US pundits.

It is sometimes worth reminding oneself of the fundamentals.

LGEN net assets work out at approx £2 a share. So anything above that is what we are paying for the future revenue stream. The dividend this year will be over 20p which is almost 40% of the current premium to net assets; which seems rather good value to me. Especially when you consider that the net assets are after providing for deferred profits of almost the magnitude of the NAV.

The 10 year average yield is closer to 6.5% and if it were to revert to the mean (not exactly an unlikely scenario) then using the 2023 dividend that would give an SP of over £3. Although the divi has been rising we can’t be sure that it will continue to do so but given the size of the deferred profits I think it is likely to do so.

I can understand that if you had bought at £3 you might be disappointed at the performance. But at £2.46 I think there is minimal risk on the downside and plenty of potential on the upside. If the dividend growth continues then we can expect to get more than £2.46 back in dividends over the next decade.

Actually, I think it could do much better than that and think it is worth a lot more than £3 so am happy to hold and be rewarded for my patience.

I have a cost of £2.35 and am also happy to have it balancing other more speculative parts of my portfolio.

GLA

Not my point at all. I’m neither being jingoistic nor climate denying.

It is undeniable that international investors have largely shunned uk stocks for 8 or more years. This must be in part due to the unremitting doom mongering hyperbole from the commentariat and press. Phrases such as “economic war with our largest market” are unhelpful and not exactly true. UK trade with the EU has, despite predictions otherwise, remained largely constant over the period. Many of the predicted disasters have also failed to materialise to any credible extent.

I take a rather detached view of it all and don’t buy the jingoism (rarely seen outside of a handful of politicians anyway) or the claims of disaster made by those trying to fight an old referendum.

I am interested in facts and sentiment and the impact that either might have on my investments.

I don’t see the world waking up to the value in the UK market for a few more years yet and in the meantime am very happy to keep topping up here whilst it is undervalued.

Bald-e., you are making my point for me quite eloquently.

I’m not sure it is crackpot stuff. It resonates with the views held by some of my foreign friends and contacts who do view us as Surreycarrie puts it.

We have spent the last nearly 8 years talking ourselves down and so shouldn’t be surprised when the rest of the world takes us at our word.

I rather like the sound of something being”absolutely alliterated”. Good wordplay…

Zac,

I followed you into lgen global tech earlier this year and am very happy with the 14% return.

Over the next 5 years I will put more into funds but am very happy with LGEN and PHNX and will hold them for a long time.

Allatsea,

None of us want to go back to the old school network way of running things (my wife’s great uncle was one of the worst governors of the Bank of England in a century and appointed because of who he was and where he went to school etc.)

What we want and have got close to in recent years is a meritocracy and I don’t want to see that progress undone. I want the best people in the job regardless of where they went to school, their race, sex or orientation.

Yup.

Guess what, they also put Aviva as overweight in late Nov.

The PHNX Santa rally has been circa 3 times AV’s.

Are JPMC a contra indicator? Asking for a friend….

Ps I ditched my long held AV position this morning to add to my overweight positions in PHNX and LGEN.

The fact is that one can overlook a ceo posturing in front of an audience if they are delivering the goods. The problem here is that it has reinforced my worry that Blanc has her eye on the wrong ball and for that reason I have not been overweight in AV to the extent that I am in LGEN and PHNX.

Both of whom have had a multiple of AV’s Santa rally.

However, this was the final straw and so this morning I sold my long held AV position and split it between LGEN and PHNX.

GLA

Yet, in the current Santa rally LGEN and PHNX prices have risen by a multiple of AV’s.

I have this morning sold my long held AV position and split the proceeds between PHNX and LGEN; driven by my concerns about the AV ceo.

Abject, is it a telecoms business perchance?

Having just read about Amanda Blancs appearance before a select committee in which she boasted of her diversity hiring policy for senior positions it reminded me of one of the reasons I am overweight in LGEN but not AV.

I prefer companies to hire primarily on merit, regardless of race or sex. These are complicated businesses and the senior people will have 30 years+ experience and if you are going to try not to hire men you are going to fish in a much smaller talent pool.

It is also not what I want to see the chief exec concentrating on.

Yet another reason to be long in LGEN imho.

It isn’t so much the market cap as we know that can change easily with sentiment.

It is the fact that the market cap is only just above the NAV which means that at the moment you are buying the assets and pretty much getting the future revenue stream for free.

Given that the NAV is after the £13b deduction for future profits already booked it could be argued that real NAV is £26b. I.e £4.50 a share.

I’d expect a hefty premium on that to surrender the future revenue stream.

We are likely to get £13b in dividends over the next decade and still have the shares. I suspect there won’t be many willing sellers until the price is right.

So, where is the tipping point? FWIW I reckon it is over £8 per share.

Hefty, but not too big for some of the US players.

I’m sure that many of you experienced market traders will disagree but as a LTH and investor this is merely my view on it.

Mr Math, I’m with you on that.

Meconopsis, thanks for that succinct and useful explanation.

It reinforces my belief that it is better to own shares in an annuity provider than to buy an annuity.

Are you also saying that there are potentially more deferred profits than the £13bn or so already logged in the accounts?